HL Deb 09 May 1983 vol 442 cc343-55

3.30 p.m.

Lord Trefgarne

My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.

Moved, That the House do now resolve itself into Committee.—(Lord Trefgarne.)

On Question, Motion agreed to.

House in Committee accordingly.

[The LORD ABERDARE in the Chair.]

Clause 1 [Up-rating orders.]:

Lord Wallace of Coslany moved Amendment No. 1: Page 1, line 8, leave out ("month") and insert ("months")

The noble Lord said: For the benefit and convenience of the Committee—and certainly not the Government—I shall move Amendment No. 1 and speak to Amendments Nos. 2, 4, 5, 6 and 7 because these amendments all have the same theme, which is to try to obtain a system whereby the increases in benefits are taken by decisions every six months. The Government may feel that this is impossible; but nothing is impossible in this computerised age, and in fact it seems that the computer given to the Conservative Party by a benevolent friend has even forecast the date of the election, something with which I dealt on the Second Reading. Seriously, the question involved in these amendments is simply that it would be greater justice to have a six-monthly review than the system proposed in this Bill. My reasons for this are quite simple. Some of us perhaps have serious doubts about the intentions of the Government in having 31st May stipulated in this Bill for the decision on pension increases in November, simply because of the forecast rate of inflation.

But this might arise in any Government at any time, and we feel there is greater justice and more common sense in this, in that it may be that in the first six months of decision, the estimate might be out and in November the adjustment can be made—and nobody can complain about that—so that there is a degree of continuity. I accept absolutely and completely that it would be impossible to have a period of less than six months.

There is an amendment down, Amendment No. 9, in the name of the noble Lord, Lord Banks, for a new clause which ties up very much with what I am proposing now. My amendment, however, goes into detail; and quite honestly I cannot see why there should be any opposition to it. The only opposition may be that at the immediate moment it could be inconvenient. But, looking ahead, and bearing in mind the tremendous advances made in technology, there is not the slightest doubt that justice could be done and could be seen to be done on all sides by having this six-monthly review.

Arguments can be produced that previous Governments should have done this; but those arguments are no excuse for our not dealing with it now. After all, as I said, we are in a new age that has come upon us somewhat rapidly. I do not intend to proceed further with my remarks on these amendments; but I commend them to the Committee as being reaonable and necessary. I concede the possible arguments that this cannot be done this year. I am prepared to receive an argument on that basis. But, on the general principle, and the principle involved in the amendment of the noble Lord, Lord Banks, I do not think I am prepared to concede anything. I beg to move.

Lord Banks

I should like to express support for these amendments, general sympathy with their purpose and I support the concept of bi-annual upratings. As I made clear when we had the debate on Second Reading, I think the Government are right to go back to the historical method instead of the forecast method; but I think that the timing of doing it is wrong and that it should not be done at a time when inflation is expected to rise because that involves a loss. The chief drawback in the historical method is the degree of delay which is involved. Bi-annual upratings will cut that down. It used to be argued by Government that it took six to seven months to carry out the necessary calculations, and that therefore you could not have more than one uprating per year. But I think it became clear during the debate of this Bill in another place that it could be done within five months and therefore it is technically possible to do it twice in a year—and other countries in fact manage to do so. France and Denmark have pensions reviewed twice yearly in relation to the index. In Finland and the Netherlands there is an automatic increase after a 3 per cent. rise in the index. In Luxembourg there is a similar automatic increase after a 5 per cent. rise. In Belgium, it follows automatically upon changes in a prices-and-wages index. It can be argued they have different systems and that ours would need to be accommodated to this idea. Perhaps that is no bad thing and we should think out ways of doing what other people have managed to do. At any rate, it is clear that it is not impossible to have the historic method and to have bi-annual upratings.

3.36 p.m.

Lord Trefgarne

The burden of these amendments is that benefits could and should be uprated twice a year rather than once. In this context, three factors have fundamental importance: necessity, cost and operational feasibility. The main case to be made for more frequent upratings on grounds of necessity arises in times of high and rapidly rising inflation. For example, the argument for six-monthly upratings was particularly relevant in 1974 and 1975 when the annual rate of inflation rose from a low point of under 12 per cent. to a high point of 26.9 per cent.

In such circumstances, the value of benefits was eroding almost as fast as new rates could be fixed. Once the annual rate of inflation fell below 20 per cent., the then Government quickly moved to an annual cycle of uprating. It is an entirely different matter when inflation has been brought down to low, single figures and when the Government intend that it should fall still further. I hope that your Lordships will agree that the inflation situation now is very different from that which existed in 1975 when inflation indeed made more frequent uprating a real necessity. By way of illustration, in the four months from November 1982 to March 1973, which is the latest figures I have at the moment, the R.P.I. had risen by only 0.6 per cent.

I turn now to costs. Six-monthly upratings would add hundreds of millions of pounds per year to the benefit cost of upratings. For example, a May uprating in addition to the normal November uprating would add about £150 million to uprating costs in 1983/84 for each 1 per cent. brought forward. Even if the uprating were to be restricted only to pensions and long-term benefits, the extra cost for each 1 per cent. brought forward would be of the order of £100 million. If there were additional resources of this order available to incorporate in the general social security budget then the proper place for consideration of such matters would be in the annual review itself. Apart from the high-benefit costs involved in more frequent upratings, there are administrative costs and difficulties which cannot lightly be ignored. It cannot be denied that it is operationally possible to uprate more than once a year; but it still takes the best part of six months to carry out the work of each uprating so that a system of twice-yearly upratings would mean a need for more staff and it would mean that large numbers of DHSS staff would need to be permanently deployed on such work. Sometimes our uprating systems have been compared unfavourably with those of other countries, particularly in relation to our partners in the European Community. But this is an unfair comparison because it does not compare like with like. For example, while most member states provide some special help for those with low incomes, including pensioners, our system of supplementary benefit is not in general matched in other EC countries. Furthermore, of the other nine member states, only the Republic of Ireland who also uprate annually, pays its pensions weekly by order-book. All the other states pay their pensions monthly, or, in the case of Italy, every two months, either by post or by credit transfer. If all beneficiaries in this country were to change to a credit transfer system of monthly payment, our operational difficulties would be lessened too.

Recently we gave our pensioners the option of having their pensions paid by credit transfer to a hank or building society, but first returns show that only a very tiny percentage of weekly-paid pensioners have opted to change to that method of payment. As long as our pensioners prefer to have their pensions paid weekly by order-book, we shall have to live with the difficulties that their choice entails. Improved technology will eventually shorten the time taken to deal with the complex process of reassessing the three to four million supplementary benefit cases which are currently reassessed clerically, but it is unlikely that significant time savings will be achieved within the next few years.

Finally, I should remind noble Lords that the cost of benefit increases have to be paid for by the working population. Contributions and taxes have to rise to meet the extra cost involved, and this leads workers to press for more frequent pay increases in compensation. This adds to inflationary pressures and serves to undo the good work of recent years in bringing down inflation to low single figures and in helping to make our industry more competitive in world markets. Now that we have inflation under control, it seems sensible to keep it under control and to reduce it still further so that pensioners may be spared the worry which inflation brings. I hope that, in the light of these arguments, the noble Lord will not wish to press his amendments.

Lord Wallace of Coslany

I do not have any intention of pressing them at the present time, for various reasons. At the same time I cannot accept entirely what the noble Lord has said in reply. One of the problems is that his department has been cutting staff. In fact the whole theme of his speech was the necessity for financial savings. He said it would cost hundreds of millions of pounds to do this double check up each year. I cannot accept this, because he is dealing with the old methods that have been employed, whereas I am suggesting that modern methods should be used. His whole theme was financial saving, which is the basis of this and every other social security Bill that we have had since the start of this Parliament.

There is a further point regarding a twice-yearly review. If the noble Lord had seen some of the letters I have received thanks to a small notice in the press on my comments on the Bill, he would realise that pensioners are in a different world altogether so far as the question of prices is concerned. This is something that every Government must consider, whether it be this one or the next one, whatever the next one may be. The noble Lord said they had asked for people to have their payments made directly into bank and Giro accounts. In fact, what he does not realise—and I am talking about the average pensioner and not those fortunate ones like myself who have another pension through service in another place—is that many pensioners have to rely desperately upon their single pension and it is small wonder that there has been very little response. Anybody who is in touch with these people—and I would give noble Lords opposite credit because a lot of them are—would understand. So far as benefits are concerned, the costs must be related to our intention to see that those at the lowest point of the income scale are given a reasonable standard of living. I say from this Box that, if sacrifices are necessary through taxation in order to achieve that ideal, then we as a nation would stand high in the world.

I do not want to intrude upon a defence debate or anything like that, but there is never hesitation when the question of defence expenditure arises. That is money possibly—though I hope to God it will not be—for the eventual destruction of humanity somewhere or another. I am concerned with the people who are in need and who have served this country, whether as dustmen or brilliant technologists. That is why I hope the Government will consider the position further, particularly the question of the review that I am calling for, and taking into account the price situation as it affects elderly people.

As I have indicated, I shall not press the amendments, at this stage. I understand that there may be a Report stage and a Third Reading. As I said on Second Reading, the whole thing is being rushed; and now today we know why. What happens on Report stage will have to be decided after I have read the noble Lord's remarks. In the meantime, in order to assist the Committee, I beg leave to withdraw Amendment No. 1.

Amendment, by leave, withdrawn.

[Amendment No. 2 not moved.]

Lord Banks moved Amendment No. 3: Page 1, line 17, at end insert ("except that, if in the second year of operation the application of this provision has not been sufficient to maintain the real value of benefits at the November 1982 level then an appropriate adjustment will be made in the percentage increase for the third year.")

The noble Lord said: I beg to move Amendment No. 3 and, with the leave of the Committee, to speak also to Amendment No. 8. This is the amendment standing in the name of the noble Baroness, Lady Jeger, the noble Lord, Lord Wallace of Coslany, and myself. May I say that the name of my noble friend Lord Kilmarnock should have been added, but it does not in fact appear on the Marshalled List.

I think we would all agree that if inflation is running at an annual rate of 4 per cent. in May, this month, and if it will be 6 per cent. next November, the beneficiaries will suffer a loss in the first year. It has been argued that this loss will be made up in the following year. The Secretary of State, Mr. Norman Fowler, in another place said this during the Second Reading debate, at col. 820: What will happen under the proposed system is that any inflation between May and November of this year or any subsequent year will automatically be caught up in the following up-rating". In other words, the loss suffered in the first year and which of course will not be repaid, will not be lost in the second year. That is not necessarily true. There is no guarantee that the loss will be made up, and I should like to explain why I say that.

In November 1982 there was an over-estimate of inflation of 2.7 per cent. so that the figure of increase was higher than the actual inflation would have allowed. We on these Benches are anxious that that amount should not be clawed back: in other words, we want to maintain the November 1982 value of benefits. We want there to be no difference between the real value of benefits at November 1984, when compared with November 1982: that is, that the second year should in fact catch up.

Under the new method the difference in up-rating between November 1982 and November 1984 will relate to a reference period, May 1982 to May 1984. That is under the method proposed in this Bill. Under the old method, it would have referred to November 1982 to November 1984. November 1982 to May 1984 is common to both of those reference periods. The new method has six months, May to November 1982, at the beginning added to it and the old method has six months, May to November 1984, at the end of it. Therefore, the difference between the two methods will depend upon the difference between the rise of prices in these two six-monthly periods at either end.

We know what the rise in prices was in the first six months, May to November 1982. It was only 1.3 per cent., which was abnormally low. If prices rise by 1.3 per cent. or less between May and November 1984, the real value as at November 1982 will have been maintained. But if prices rise by more than 1.3 per cent. between May and November 1984, the real value as at November 1982 will have been reduced and that, I think most of us would agree, is the most likely outcome.

This amendment would ensure that if the 1982 value declined in this way between 1982 and 1984, then an adjustment to take care of that would be made in the 1985 uprating. Thus, the November 1982 value would have been preserved. So that is the object of this amendment. It is to make sure that the November 1982 value is maintained, and it will not necessarily be maintained unless some special provision is made to ensure that that is so. I beg to move.

3.52 p.m.

Baroness Jeger

I rise briefly to support the amendment moved by the noble Lord, Lord Banks. He has moved it so clearly and so ably that there is little need for me to go into a great deal of detail. I noticed that, when the Minister was replying to the earlier amendment, he referred to the extra cost that would be incurred if the changes that we wish for were made. If there is an extra cost to the Government, that must mean a loss to the beneficiaries. When he talks about all these thousands of pounds being a charge on the Government, it makes us feel that we really ought to look at those thousands of pounds of which beneficiaries are being deprived. It cannot work both ways.

Another reason why I support the amendment moved by the noble Lord, Lord Banks, is that there is a volatility in prices and, as my noble friend Lord Wallace said, that volatility particularly affects pensioners, the unemployed and people who are at the receiving end of these benefits, because many of the points which affect the price index are not reflected in the budgets of these people.

Another point which makes me support this amendment is the unfairness of the inability to catch up. For instance, if anybody dies in the period between one point of calculation and another, there is no compensation for his family. If the index has risen and then an unfortunate person dies, that money is lost forever. So the idea that we will catch up next year does not apply, especially to a lot of elderly people. Neither does it apply to the strange and unusual case of a person on unemployment benefit who might, even under this Government, suddenly find a job. He will then be taken out of unemployment benefit and will never be compensated for the shortfall in the unemployment benefit that he received when he was out of work, because he will have got back to work.

If the noble Lord can explain that that is not the case, then I shall be happy to listen to him, but we think that this is a very fair amendment. This question of the real benefit must be more carefully considered, and some way must be found of making it up to people who suffer from the proposals in this Bill. So I support this amendment.

Lord Kilmarnock

I just want to confirm that it was intended that my name should appear on the amendment, and I have received a handsome apology from the Public Bill Office for the fact that it did not. I shall not detain your Lordships, but I just want to revert to the point I made on Second Reading, which was that we on this Bench support, in principle, the idea of a reversion to the historic method of calculation. We also feel it is extremely important that the new method should not only get off to a fair start, but should be seen to get off to a fair start. It seems to me that the amendment, which has been very ably proposed and moved by the noble Lord, Lord Banks, takes care of this. We therefore feel that it is a reasonable point to which the Government should pay serious consideration. It could be a one-off adjustment to make sure that the whole thing gets going on the right basis. We therefore support the amendment.

Lord Trefgarne

The purpose of this amendment is plain, even if it is far from clear, I fear, that as drafted it would achieve the desired result. It provides a variation on a theme which has already been the subject of extensive debate, both here and in the other place. Up to now, the suggestion has been that there should be some form of adjustment to benefits in 1984, if this year's up-rating increase is less than the percentage rise in prices from November 1982 to November 1983. The noble Lord, Lord Banks, goes one stage further than that by proposing to delay any adjustment of this kind until we have had at least two up-ratings on the new basis.

I am afraid that the Government cannot support this amendment. The whole purpose of the Bill is to restore certainty and stability to the up-rating process. We no longer wish to be looking over our shoulder at minor variations in the annual inflation rate from one month to another. We want to get away from all questions of overshoot, shortfall or adjustment. Our simple proposal is that the actual year-on-year rise in prices each May shall be used to determine the rise in benefits in the following November. On Second Reading, I spelled out why the May figures are the latest actual figures we can use, if beneficiaries are to get their increases paid on time. When we reach a position where we can move to a known figure later than May, we will gladly do so, but that time is not yet here.

This year the change in method is being introduced in favourable circumstances for pensioners, despite the remarks of the noble Lord, Lord Banks, on this point on Second Reading and again today. A significant part of the rise in prices from May 1982 to May 1983 has already been reflected in the November 1982 benefit increase, yet it will also count towards the increase in November 1983. The increase in November 1982 was 2.7 per cent. higher than was justified by the actual rise in prices in the preceding 12 months, yet the 1983 up-rating will still reflect a full 12 months' movement of prices from May to May, and any rise in prices in the 12 months from May 1983 will automatically be taken into account in the 1984 up-rating.

It is better to proceed on this simple and reliable basis than to look back to some base year of no particular relevance to the pensioner. What pensioners will be looking for in 1984 and 1985 is not what they had in November 1982, but whether the rate of inflation can be further reduced below the present level so that they need no longer fear it, as they did throughout the 1970s.

This Government are more firmly committed to bringing down the rate of inflation than any of the other major parties. The smaller and more stable the annual rate of inflation, the less the chance of any significant difference between the May inflation rate and the November inflation rate. Pensioners know that their benefit rises will relate to the annual movement of prices and not to the inherent uncertainties of a forecast system. The Government's position is therefore clear. The November 1982 overshoot is not being clawed back. Pensioners and others have enjoyed that over-provision throughout 1983, and the rates set in 1982 will form the basis of future up-ratings under the historic method. Any further improvement in the value of pensions must, I fear, depend upon the country's economic performance, the generation of new wealth and the ability of taxpayers and contributors to meet the necessary extra costs.

In the light of these explanations, I hope that the noble Lord, Lord Banks, and those who supported him, will be persuaded to withdraw these amendments. If he presses them, I hope that your Lordships will reject them.

Baroness Jeger

Before the noble Lord sits down, can he say whether the Government will provide any recompense for people who have had an underpayment of benefit because of inflation and who then, because of getting a job, never, apparently, obtain recompense for the period during which they have been underpaid in relation to inflation?

Lord Trefgarne

In the context both of this amendment and of the earlier one, I have already explained why more frequent up-ratings are not appropriate. What the noble Baroness is really asking for, I think, is a weekly up-rating arrangement, or some such arrangement as that, whereby pensioners are always paid benefit precisely in line with the level of inflation. That, I am afraid, is not a practicable proposition, and I cannot hold out any hope of the Government thinking otherwise.

Baroness Jeger

I apologise for not making myself clear. I was not talking about pensioners. I thought I referred quite clearly to the unemployed who will have been receiving unemployment benefit at a rate below inflation but who, if they get a job before the year of reassessment is up, will never get that loss of money paid back.

Lord Trefgarne

I understood the noble Baroness was referring to unemployment benefit recipients. I remember that she referred earlier to pensioners who might suffer a similar disadvantage by dying in between up-ratings. The same argument applies to unemployment benefit recipients as applies to pensioners who sadly die while in receipt of pension in between up-rating points: that in order to ensure that unemployment benefit recipients are not disadvantaged in the way the noble Baroness describes, up-ratings on a very frequent basis would be necessary. For the reasons I have described, I fear that this is not possible.

Lord Banks

The reason why this amendment was put down was because there is no guarantee that the up-rating in the second year will make good the loss which I think we are all agreed is bound to take place in the first year. The noble Lord did not address himself to that point. He said he did not think that the amendment would achieve its purpose, but he did not say why he did not think it would achieve its purpose. He said he wanted to get away from overshoot or shortfall. The whole purpose of my argument was to show that under the present system you could not get away from overshoot and shortfall. If, therefore, you did not want to lose value, it was necessary to have an arrangement of this kind. I can well understand that these are quite complicated arguments to take in when expressed verbally. Therefore, I believe it is only right that the Minister should have an opportunity to read what I have said and then to answer the points I have raised. For that reason, I beg leave to withdraw the amendment, but I hope to return to it at a later stage.

Amendment, by leave, withdrawn.

[Amendments Nos. 4 to 8 not moved.]

Clause 1 agreed to.

Clause 2 agreed to.

4.5 p.m.

Lord Banks moved Amendment No. 9: After Clause 2, insert the following new clause: (". The Secretary of State shall, not later than six months after the date on which this Act comes into force, recommend to Parliament a method to provide for bi-annual upratings of the retirement pension.")

The noble Lord said: The earlier amendments dealing with bi-annual up-ratings obliged the Government to up-rate twice a year. The noble Lord put forward objections to that: administrative objections, and objections as to the cost of benefits and the cost of administration. This amendment does not oblige the Government to up-rate bi-annually at the start. It does not even oblige the Government to up-rate biannually at any time. All it does is to ensure that the Government recommend a method of doing this to Parliament within six months of the Act coming into force. We know that other countries manage to do this. We realise that there are perhaps difficulties within our own system which would need to be removed in some way if we were to do the same as other countries, but there is no reason why we should not do the same. We know that technically it is possible so to do. Therefore, all the amendment asks is that the Government should look at this question to see how what is done in other countries could be done here, and to recommend such a change in due course. I beg to move Amendment No. 9.

Lord Wallace of Coslany

I rise to support this amendment, which I consider to be excellent and also extremely acceptable to the Government, who now have the opportunity to prove that they are prepared to look into the future with, shall I say, a more benevolent eye than they have looked into the past since they have been in office. This is an arrangement whereby the Government can make up their mind in due course. It does not tie them down to detail, as did my amendments, excellent though they were. If the Government refuse this amendment, the mind boggles. There is no reason whatever why any reasonable Government should not accept this amendment.

Lord Kilmarnock

We on this Bench support the amendment. It is worth pointing out—the noble Lord, Lord Wallace of Coslany, hinted at it—that this amendment is very similar to one which was put down by one of the Government's own Back-Bench supporters in another place, who pointed out when moving it that the Conservative party had made election pledges on two occasions to bring about a reform of this nature when they came to power but that it had not happened. I am very glad that in this Committee the noble Lord, Lord Trefgarne, has finally put to death the ground of administrative impossibility of a biannual up-rating. It is interesting that the noble Lord has admitted that it is possible, in direct contradiction to what the Minister, Mr. Rossi, said in another place at col. 327 on Wednesday, 20th April: that bi-annual up-ratings are so administratively difficult as to be beyond contemplation. The noble Lord, I am glad to say, has corrected that error.

It is obvious from the implications of the Bill before the Committee at the moment that if the Government are planning to make an announcement in June—17th June has been mentioned for an up-rating—and if it is to be in place for implementatation by 21st November, the period would be five months and one week. Therefore, by implication, in this Bill it is perfectly clear that an up-rating can be performed in just over five months. This is exactly what the amendment proposes, if the Bill becomes law.

The administrative cost is not great. It is about £10 million per bi-annual up-rating. It is clear that we should get feasibility and the fact that it is not costly out of the way. The remaining important consideration is simply that of the effect on public expenditure. If the Government are going to reject this idea, they must come clean and reject it on the grounds of additional public expenditure. The Government would indeed incur extra cost on a rising rate but if, on the other hand, inflation continues on a steady path or on a downward path then the Government would save money.

Finally, this proposal seems to me to be a logical extension of the Government's own proposal to make the up-rating system fairer, more accurate, and more in tune with the real and actual inflation rate ruling at the time. On those grounds, and on the grounds of the Government's previous election pledges, I can see no reason why the Government can possibly reject this amendment.

Lord Trefgarne

I hope that your Lordships will forgive me if I do not again deploy all the arguments I deployed against earlier amendments along these lines. As I ventured to suggest then, Conservative support for this idea, which certainly was around in 1974 or 1975, was in the context of a rate of inflation in excess of 20 per cent. I am ready to accept now the arguments in favour of this sort of arrangement when inflation is running at that sort of level. But we are now facing inflation at a wholly different level—something below 5 per cent., I suppose, at the present time. So it follows that the necessity for more frequent up-rating falls away.

I agree with the noble Lord, Lord Kilmarnock, that it is not possible to say that two annual up-ratings are a physical impossibility so far as the DHSS are concerned. However, it is a very major undertaking, let me say. The noble Lord referred to a figure of £10 million for administrative costs. It is at least that. It involves the employment of some 1,300 extra staff, which is not a prospect we would lightly entertain. However, the essential point is that upon which the noble Lord, Lord Kilmarnock, put his finger—that the extra costs in terms of the increased benefit that would have to be paid out will be very substantial. I referred in my earlier remarks to a sum of about £150 million in respect of each 1 per cent. brought forward in this way.

I have to tell the Committee that unless we are to somehow reduce existing benefits to cope with that additional cost, we shall be imposing an additional burden of this amount upon employers and employees. That is not something they would lightly entertain. Indeed, I believe it would be widely regarded as unfortunate, and it is not something that I am prepared to recommend to your Lordships. I hope that, for the reasons deployed earlier in relation to the other amendments and now underlined again by me, the noble Lord, Lord Banks, will not press his amendment.

Lord Wallace of Coslany

The noble Lord, Lord Trefgarne, referred to the fact that an additional 1,300 staff would be necessary. There is the possibility that, by taking 1,300 people from the unemployment queue and thus relieving the state of the need to pay unemployment benefit, there will be some saving of public money.

Lord Trefgarne

The difficulty is that I do not believe there are 1,300 experts of this kind on the unemployment register.

Baroness Jeger

Then train them.

Lord Banks

I must say that I find the reply of the noble Lord, Lord Trefgarne, disappointing. I had hoped that the Government would be prepared to accept the concept of bi-annual up-ratings even if they were not prepared to incorporate this as something that would be brought into practice as soon as the Bill becomes law. As my noble friend Lord Kilmarnock pointed out, it seems that public expenditure is the only substantial ground on which this proposal is registered.

If there is an increase half way through the year, it is true that a certain amount of expenditure would be added in the next six months that otherwise would not have been made—but the increase at the end of that six months will not be so great as if the first up-rating had not been undertaken. So I am not sure that the argument that the noble Lord has put to us is as strong as he thinks it is. I believe that there is a very strong argument in principle for establishing that we want to move towards bi-annual upratings. For that reason, I should like to test the opinion of the Committee.

4.15 p.m.

On Question, Whether the said amendment (No. 9) shall be agreed to?

Their Lordships divided: Contents, 70; Not-Contents, 95.

Aberdeen and Temair, M. Howie of Troon, L.
Airedale, L. Irving of Dartford, L.
Amherst, E. Jeger, B.
Amulree, L. John-Mackie, L.
Ardwick, L. Kilbracken, L.
Aylestone, L. Kilmarnock, L.
Banks, L. Leatherland, L.
Barrington, V. Llewelyn-Davies of Hastoe, B.
Beaumont of Whitley, L. Lloyd of Hampstead, L.
Birk, B. Mayhew, L.
Bishopston, L. Mishcon, L.
Blease, L. Molloy, L.
Blyton, L. Morris of Grasmere, L.
Briginshaw, L. Oram, L.
Brockway, L. Peart, L.
Bruce of Donington, L. Pitt of Hampstead, L.
Byers, L. Plant, L.
Chitnis, L. Ponsonby of Shulbrede, L.
Cledwyn of Penrhos, L. Rea, L.
Collison, L. Reilly, L.
Cooper of Stockton Heath, L. Sainsbury, L.
David, B. Segal, L.
Diamond, L. Shackleton, L.
Donaldson of Kingsbridge, L. Shinwell, L.
Elwyn-Jones, L. Stedman, B.
Ewart-Biggs, B. Stewart of Alvechurch, B.
Ezra, L. Stone, L.
Fisher of Rednal, B. Strabolgi, L.
Gaitskell, B. Taylor of Mansfield, L.
Gallacher, L. Tordoff, L.
Gormley, L. Underhill, L.
Gregson, L. Wallace of Coslany, L. [Teller.]
Hale, L. Wells-Pestell, L.
Harris of Greenwich, L. Wigoder, L. [Teller.]
Houghton of Sowerby, L. Wootton of Abinger, B.
Ailesbury, M. Daventry, V.
Airey of Abingdon, B. Davidson, V.
Ampthill, L. De Freyne, L.
Auckland, L. Denham, L. [Teller.]
Avon, E. Drumalbyn, L.
Balfour of Inchrye, L. Ebbisham, L.
Belhaven and Stenton, L. Eccles, V.
Beloff, L. Effingham, E.
Belstead, L. Ellenborough, L.
Campbell of Alloway, L. Elliot of Harwood, B.
Campbell of Croy, L. Elton, L.
Cockfield, L. Forbes, L.
Coleraine, L. Gainford, L.
Constantine of Stanmore, L. Gardner of Parkes, B.
Cottesloe, L. Glanusk, L.
Craigavon, V. Glenarthur, L.
Cullen of Ashbourne, L. Glenkinglas, L.
Greenway, L. Nugent of Guildford, L.
Hailsham of Saint Marylebone, L. Orkney, E.
Orr-Ewing, L.
Henley, L. Plummer of St Marylebone, L.
Hornsby-Smith, B. Portland, D.
Hylton-Foster, B. Radnor, E.
Kilmany, L. Rankeillour, L.
Kinloss, Ly. Rodney, L.
Kinnaird, L. St. Davids, V.
Lane-Fox, B. Sempill, Ly.
Lauderdale, E. Skelmersdale, L.
Lawrence, L. Somers, L.
Long, V. Spens, L.
Loudoun, C. Stamp, L.
Lucas of Chilworth, L. Strathspey, L.
Lyell, L. Sudeley, L.
McFadzean, L. Suffield, L.
Macleod of Borve, B. Swinton, E. [Teller.]
Macpherson of Drumochter, L. Taylor of Hadfield, L.
Terrington, L.
Mansfield, E. Teynham, L.
Margadale. L. Thorneycroft, L.
Marley, L. Trefgarne, L.
Masham of Ilton, B. Trenchard, V.
Merrivale, L. Trumpington, B.
Mersey, V. Tryon, L.
Molson, L. Tweedsmuir, L.
Monson, L. Vaux of Harrowden, L.
Montgomery of Alamein, V. Vickers, B.
Morris, L. Vivian, L.
Murton of Lindisfarne, L. Young, B.
Newall, L.

Resolved in the negative, and amendment disagreed to accordingly.

Clause 3 agreed to.

House resumed: Bill reported without amendment.